Petition — Army and Air Force Exchange Service v. Sheehan

80-1437

No. }

ALEXANDER . STOVER, ff

18

aue Buprone our te Hs

OCTORER TERM, 1986

ARMY AND AIR ForcE EXCHANGE SERVICE,

PETITIONER

V.

ARTHUR EDWARD SHEEHAN

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Wave H. McCREE, Jr.

Solicitor General

THOMAS S. MARTIN

Acting Assistant Attorney General

ELLIOTT SCHULDER

Assistant to the Solicitor General

WILLIAM KANTER

ELoIsE E. DAVIES

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

In the Supreme Court of the United States

OCTOBER TERM, 1980

No.

ARMY AND AIR FORCE EXCHANGE SERVICE,

PETITIONER

V.

ARTHUR EDWARD SHEEHAN

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

QUESTION PRESENTED

Whether a discharged military exchange employee

who was appointed to his position may bring a civil

action for monetary damages against the United

States under the Tucker Act, 28 U.S.C. 1346 (a) (2),

predicated upon an implied-in-fact contract.

(1)

TABLE OF CONTENTS

Opinion below

Jurisdiction

Statute and regulations involved

Statement

Reasons for granting the petition

Conclusion

Appendix A

Appendix B

Appendix C

Appendix D

Appendix E

TABLE OF AUTHORITIES

Cases:

Aycock-Lindsey Corp. v. United States, 171 F.2d

518

Borden v. United States, 116 F. Supp. 878

Champaign-Urbana News Agency, Inc. v. J. L.

Cummins News Co., 682 F.2d 680

Eastport S.S. Corp. v. United States, 872 F.2d

1002

Goodyear Tire & Rubber Co. v. United States, 276

U.S. 287

Hatzlachh Supply Co. v. United States, 444 U.S.

460

Hopkins. v. United States, 513 F.2d 1860, rev'd,

427 U.S. 128

Keetz v. United States, 168 Ct. Cl. 20

Kyer v. United States, 369 F.2d 714, cert. denied,

887 U.S. 929

Porter v. United States, 496 F. 2d 583, cert. denied,

420 U.S. 1004

(i)

S 2 420

IV

Cases—-Continued Page

Pulaski Cab Co. v. United States, 157 F. Supp.

955 7

Richardson v. United States, 214 Ct. Cl. 757 9

Spooner v. United States, 211 Ct. Cl. 312 .............. 9

Standard Oil Co. v. Johnson, 316 U.S. 481 ............ 7

United States v. Hopkins, 427 U.S. 128 .................. 4, 10

United States v. Minnesota Mutual Investment Co.,

yo Bis Se ee 18

United States v. Mitchell, 445 U.S. 538 5

United States v. Testan, 424 U.S. 392 4,6,11

Statutes:

Administrative Procedure Act, 5 U.S.C. 702 4

Back Pay Act, 5 U.S.C. (Supp. III) 5595 f seq.:

5 U.S.C. (Supp. III) 5596 6

5 U.S.C. (Supp. III) 5596 (e) 6

Federal Soil Conservation and Domestic Allotment

Act 12

Tucker Act, 28 U.S.C. 1846(a) (2), as amended by

Pub. L. Mo. 91-350, Section 1(a), 84 Stat.

449 1, 3, 7

5 U.S.C. 2105 (e) 9

5 U.S.C. (Supp. II) 2105 (e) 6, 13

10 U.S.C. 4779 (e) 2

10 U.S.C. 9779 (e) 2

28 U.S.C. 1881 4

28 U.S.C. 1491 11

Miscellaneous:

H.R. Rep. No. 91-933, 91st Cong., 2d Sess.

(1970) 7

S. Rep. No. 91-268, 91st Cong., Ist Sess. (1969) 7

The Solicitor General, on behalf of the Army and

Air Force Exchange Service, petitions for a writ of

certiorari to review the judgment of the United States

Court of Appeals for the Fifth Circuit in this case.

OPINION BELOW

The opinion of the court of appeals (App. A, infra,

la-16a) is reported at 619 F. 2d 1132.

JURISDICTION

The judgment of the court of appeals (App. C,

infra, 18a-19a) was entered on June 27, 1980. A

petition for rehearing was denied on September 26,

1980 (App. D, infra, 20a-21a). On December 18,

1980, Justice Powell extended the time for filing a

petition for a writ of certiorari to and including Feb-

ruary 23, 1981. The jurisdiction of this Court is in-

voked under 28 U.S.C. 1254(1).

STATUTE AND REGULATIONS INVOLVED

The Tucker Act, 28 U.S.C. 1346 (a) (2), provides

in pertinent part:

(a) The district courts shall have original

jurisdiction, concurrent with the Court of

Claims, of:

* * * * *

(2) Any other civil action or claim against

the United States, not exceeding $10,000 in

amount, founded either upon the Constitution,

or any Act of Congress, or any regulation of an

executive department, or upon any express or

implied contract with the United States, or for

(1)

liquidated or unliquidated damages in cases not

sounding in tort. For the purpose of this para-

graph, an express or implied contract with the

Army and Air Force Exchange Service, Navy

Exchanges, Marine Corps Exchanges, Coast

Guard Exchanges, or Exchange Councils of the

National Aeronautics and Space Administration

shall be considered an express or implied contract

with the United States.

The pertinent regulations are set forth at App. E,

infra, 22a-35a.

STATEMENT

On March 16, 1976, respondent was serving as an

appointed managerial employee of the Army and Air

Force Exchange Service (AAFES) at Fort Jack-

son, South Carolina.’ On that date, respondent re-

ceived notice of separation for cause based upon cer-

tain acts of misconduct off the job that allegedly

reflected discredit upon the AAFES and rendered his

continued employment incompatible with the best in-

terests of the AAFES.’ Respondent’s discharge was

sustained upon administrative review (App. A, infra,

la-4a).

Respondent then brought this action in the United

States District Court for the Northern District of

Texas, alleging that his discharge was procedurally

defective, arbitrary, capricious, unsupported by sub-

1The AAFES is a nonappropriated fund instrumentality,

which means that it does not receive its monies by con-

gressional appropriations. See 10 U.S.C. 4779(c), 9779(c).

* On November 18, 1975, respondent was arrested for

violation of state drug laws and on March 1, 1976, he

pleaded guilty in state court to four counts charging him with

possession of various illegal drugs (Complaint 8; Ex. A).

stantial evidence, an abuse of discretion, in excess of

statutory authority, and in violation of his constitu-

tional rights (App. A, infra, 4a). Respondent sought,

inter alia, monetary damages including back pay

(Complaint I 20, 25).“ The district court dismissed

the suit for lack of subject matter jurisdiction (App.

B, infra, 17a).

The court of appeals reversed (App. A, infra, la-

16a). It held that the requisite jurisdiction over

respondent’s claims for monetary relief was provided

by the 1970 amendment to the Tucker Act, 28 U.S.C.

1346 (a) (2), which confers jurisdiction over claims

founded upon express or implied contracts with cer-

tain nonappropriated fund instrumentalities, includ-

ing the AAFES (App. A, infra, 6a-9a). The court

acknowledged the AAFES’ argument that respond-

ent’s action could not be based on a breach of con-

tract theory because under governing regulations re-

spondent served by appointment rather than by con-

tract (id. at 7a-8a). But the court concluded that

“Te]ven if the regulations label the commencement

of [respondent’s] employment as pursuant to ‘ap-

pointment,’ ” the AAFES’ regulations concerning dis-

charge procedures “were part of a collateral implied

in-fact contract between [respondent] and the

AAFES that the AAFES would adhere to the regu-

lations in its dealings with him” (id. at 8a; emphasis

in original). Accordingly, the court ruled that re-

spondent’s allegation that his discharge violated con-

trolling regulations was equivalent to an allegation

of a breach of an implied-in-fact contract and that

such a claim was sufficient under the Tucker Act to

* Respondent also sought nonmonetary relief, including re-

instatement, accrued vacation time and sick leave.

4

avoid dismissal on jurisdictional grounds (App. A,

infra, ga).

REASONS FOR GRANTING THE PETITION

The court of appeals has held in this case that be-

cause of the existence of exchange service regulations

setting forth discharge procedures, an appointed ex-

change service employee has an implied-in-fact con-

tract with the exchange service that entitles him, upon

his discharge, to bring suit for money damages under

the Tucker Act on the ground that his discharge was

processed in violation of the applicable regulations.

This holding is foreclosed by this Court’s decisions in

United States v. Hopkins, 427 U.S. 123 (1976), and

United States v. Testan, 424 U.S. 392 (1976). In

Hopkins, the Court drew a clear distinction between

“contract” and “appointed” exchange service em-

ployees and held that only the former may sue the

United States for wrongful discharge under the

Tucker Act. In Testan, the Court held that federal

employees who alleged that they had been improperly

classified under Civil Service personnel regulations

could not sue the United States for damages under

the Tucker Act because even if the employees’ sub-

stantive rights had been violated, the mere existence

of a substantive right, without an explicit grant of

entitlement to monetary relief for violation of that

right, does not create the necessary waiver of sov-

ereign immunity. Under the court of appeals’ anal-

The court of appeals also held that the district court had

jurisdiction over respondent’s claims for nonmonetary relief

pursuant to 28 U.S.C. 1331 and that the requisite waiver of

sovereign immunity was provided by the 1976 amendment to

the Administrative Procedure Act, 5 U.S.C. 702 (App. A,

infra, 10a-15a). We do not seek review of this aspect of the

court of appeals’ decision.

5

ysis in this case, however, the employees in Hopkins

and Testan would have had valid damage actions

against the United States based on a breach of an

implied-in-fact contract.

If the decision of the court of appeals is permitted

to stand, the United States will be subjected to claims

for money damages that were plainly not contem-

plated by Congress when it enacted the Tucker

Act and when it amended that Act in 1970. In light

of the manifest error of the decision below and the

significance of the issue concerning the scope of fed-

eral court jurisdiction under the Tucker Act, review

by this Court is warranted. However, because the

outcome of this case is clearly controlled by the deci-

sions in Hopkins and Testan, we believe that sum-

mery reversal would be appropriate.

1. The court of appeals correctly recognized (App.

A, infra, 5a-7a) that the decision in this case turns

on whether the United States has waived sovereign

immunity to suit for money damages by a former

AAFES employee alleging that he has been im-

properly discharged. As this Court recently reiterated

in United States v. Mitchell, 445 U.S. 535, 538

(1980) :

It is elementary that [the United States, as

sovereign, is immune from suit save as it con-

sents to be sued. . ., and the terms of its con-

sent to be sued in any court define that court’s

jurisdiction to entertain the suit.” United States

v. Sherwood, 312 U.S. 584, 586 (1941). A

waiver of sovereign immunity “cannot be im-

plied but must be unequivocally expressed.”

United States v. King, 395 U.S. 1, 4 (1969).

Such unequivocal expression must be found in a con-

stitutional provision, statute or regulation that cre-

ates a substantive right against the United States for

money damages or in a contract entered into by the

United States. Eastport S. S. Corp. v. United States,

372 F.2d 1002, 1007-1009 (Ct. Cl. 1967). Because

the Tucker Act is itself only a jurisdictional statute

that does not create such an enforceable substantive

rignt, it is necessary to look elsewhere to find the

requisite waiver of sovereign immunity. See United

States v. Testan, supra, 424 U.S. at 398. There is

no constitutional provision, statute or regulation cre-

ating a substantive right, enforceable against the

United States, to money damages for improper dis-

charge from a military exchange. Neither the regu-

lations governing employment in the Army and Air

Force Exchange Service nor the statutes pursuant

to which those regulations were promulgated create

a substantive right to compensation from the federal

government for wrongful discharge. Indeed, in 5

U.S.C. (Supp. II) 2105 (e), Congress explicitly denied

this right to exchange service employees by excluding

them from coverage of certain laws administered by

the Office of Personnel Management, including the

Back Pay Act (5 U.S.C. (& Supp. III) 5596).°

Furthermore, a right to damages in this case can-

not be founded upon an express or implied contract.

Prior to 1970, this proposition was undisputed, be-

56 U.S.C. (Supp. II) 2105 (e) provides in pertinent part:

An employee paid from nonappropriated funds of the

Army and Air Force Exchange Service * * * is deemed

not an employee for the purpose of—

(1) laws * * * administered by the Office of Per-

sonnel Management

The Back Pay Act, 5 U.S.C. (& Supp. III) 5596, is admin-

istered by the Office of Personnel Management (see 5 U.S.C.

(Supp. III

7

cause contracts with military exchanges were not con-

tracts “with the United States.” In Standard Oil

Co. v. Johnson, 316 U.S. 481, 485 (1942), this Court

observed that, although the military exchanges are

“arms of the Government” and “integral parts of the

War Department,” the “Government assumes none

of the financial obligations of the exchange.“ There-

after, in a series of decisions* the Court of Claims

held that because the government had assumed no

liability for the financial obligations of the military

exchanges, it could not be said to have consented

to be sued on such obligations and, accordingly, no

“claim against the United States” existed under the

Tucker Act.

In 1970 Congress took steps to remove this per-

ceived inequitable “loophole” by amending the Tucker

Act (Pub. L. No. 91-350, Section 1(a), 84 Stat. 449),

to provide that:

For the purpose of this paragraph, an express

or implied contract with the Army and Air Force

Exchange Service, Navy Exchanges, Marine

Corps Exchanges, Coast Guard Exchanges, or

Exchange Councils of the National Aeronautics

and Space Administration shall be considered an

oe or implied contract with the United

tates.

The Court in United States v. Hopkins, supra, con-

sidered the effect of this amendment on monetary

* Borden v. United States, 116 F. Supp. 873 (Ct. Cl. 1958) ;

Keetz v. United States, 168 Ct. Cl. 205 (1964); Pulaski

Cab Co. v. United States, 157 F. Supp. 955 (Ct. Cl. 1958);

Kyer v. United States, 369 F. 2d 714 (Ct. Cl. 1966), cert.

denied, 387 U.S. 929 (1967).

7§. Rep. No. 91-268, 91st Cong., Ist Sess. 2 (1969); H. R.

Rep. No. 91-938, 91st Cong., 2d Sess. 2 (1970).

2

claims advanced by discharged military exchange

employees.

In Hopkins, an AAFES employee, claiming wrong-

ful discharge, brought suit in the Court of Claims for

money damages under the 1970 amendment to the

Tucker Act. The government moved to dismiss the

action for lack of subject matter jurisdiction. The

Court of Claims ruled, however, that it had jurisdic-

tion based upon an express or implied contract of

employment. Hopkins v. United States, 513 F.2d

1360 (Ct. Cl. 1975).

This Court vacated and remanded to the Court of

Claims, finding that that court had erred in assum-

ing, without a sufficient examination of the appli-

cable regulations, that Hopkins held his position by

“contract” rather than by “appointment.” 427 U.S.

at 127, 130. The Court compared the status of or-

dinary” employees of the AAFES, who are hired

under one set of Army and Air Force regulatior.,

with the status of “service contract” employees, who

are hired under another totally different set of Army

and Air Force regulations. The Court determined

that “ordinary” employees serve by appointment,

while others who perform “direct services” on or off

the military bases, such as “janitorial and window

cleaning service,” are hired by contract. And it

pointed out that the two categories are mutually

exclusive, since the governing regulations expressly

prohibit “exchange employees” from receiving service

contracts. 427 U.S. at 127-129.

The Court concluded that the 1970 amendment to

the Tucker Act was applicable to employment con-

tracts as well as to contracts for goods and services

and that AAFES contract employees thus have a

right to sue for wrongful discharge in the Court of

Claims. 427 U.S. at 126. However, the Court reached

a different conclusion with respect to “ordinary”

AAFES employees, who hold their positions by ap-

pointment. It noted that while Congress had granted

appointed exchange employees many of the privileges

enjoyed by appointed federal employees, under 5

U.S.C. 2105 (e) it had expressly excluded them from

the coverage of the Back Pay Act. 427 U.S. at 128.

The Court also noted that when Congress amended

the Tucker Act in 1970 it did not change any of the

provisions of the United States Code dealing with

exchange employees nor did it require that the ex-

changes employ all persons pursuant to contract. 427

U.S. at 129. The only reasonable implication that can

be drawn from the Court’s analysis and disposition in

Hopkins is that if Hopkins were found on remand

to be an “appointed” employee, rather than a service

contract employee, there was no contractual relation-

ship on which Tucker Act jurisdiction could be based.

Hopkins thus leaves no room for the court of ap-

peals’ theory that although “the commencement of

[respondent’s] employment [was] pursuant to ap-

pointment,’” his continued employment was gov-

erned by an implied-in-fact contract that the AAFES

would adhere to its regulations in its dealings with

him (App. A, infra, 8a).*

8 Hopkins was subsequently settled by the parties prior to

the Court of Claims’ decision on remand. However, the Court

of Claims has since decided two cases in accordance with the

teachings of this Court’s decision in Hopkins. In Spooner v.

United States, 211 Ct. Cl. 312 (1976), a discharged AAFES

employee sued for back pay. While recognizing that the em-

ployee could have held his position either by appointment or

by contract, the Court of Claims concluded that since the

complaint had averred no facts that established a contract

relationship, the court was without jurisdiction to entertain

the suit. See also Richardson v. United States, 214 Ct. Cl. 757

(1977).

10

2. Moreover, the cour. of appeals’ ruling that the

AAFES’ failure to follow its own regulations in dis-

charging respondent affords a basis for seeking

money damages under the Tucker Act is also in-

compatible with this Court’s decision in United States

v. Testan, supra. In Testan, two Department of De-

fense trial attorneys claiming that their positions had

been erroneously classified under pertinent Civil Serv-

ice regulations sued the United States in the Court of

Claims for money damages for the period of their

allegedly wrongful classifications. They argued that

“the Tucker Act fundamentally waives sovereign im-

munity with respect to any claim invoking a constitu-

tional provision or a federal statute or regulation,

and makes available any and all generally accepted

and important forms of redress, including money

damages.” 424 U.S. at 400. This Court, however,

rejected that argument. It held that the Tucker Act

is merely jurisdictional and does not create any sub-

stantive right enforceable against the United States,

and that none of the statutes that the plaintiffs

claimed had been violated by their allegedly improper

classifications contained an express provision for an

award of monetary relief to a person who has been

erroneously classified. Subsequently, in Hopkins, the

Court noted that Hopkins’ alternative contention that

he had an enforceable claim under the Tucker Act

because his discharge was in violation of both execu-

tive regulations and due process principles was di-

rectly foreclosed by Testan. 427 U.S. at 130. In light

of the ruling in Testan, it is not sufficient under the

Tucker Act for a plaintiff such as respondent to

claim that he was deprived of a right granted by a

constitutional provision, a statute or a regulation; the

provision upon which the claim is founded must cre-

ate a substantive right to monetary compensation

from the United States.

11

By resorting to the fiction of an implied - in- fact“

contract, the court of appeals in the instant case

has permitted respondent to bring a monetary elaim

against the AAFES under the Tucker Act premised

solely upon allegations that in discharging respond-

ent the AAFES failed to adhere to its own procedural

regulations governing employee discharges. This ap-

proach cannot be reconciled with the Court’s admoni-

tion in Testan that “the grant of a right of action

must be made with specificity.” 424 U.S. at 400. The

jurisdictional grant in the Tucker Act amendment is

limited to “express or implied contract[s]” with the

military exchanges; that provision cannot logically be

read more broadly than the jurisdictional grant con-

strued in Testan, which permits the Court of Claims

to entertain suits against the United States “founded

either upon the Constitution, or any Act of Congress,

or any regulation of an executive department,” as

well as upon “any express or implied contract with

the United States.” 28 U.S.C. 1491. Thus, if, as

the Court held in Testan, an agency’s alleged viola-

tion of its employment regulations does not state a

cause of action cognizable under the Tucker Act

where appointed federal employees are concerned, it

follows that a military exchange’s alleged violation

of its employment regulations does not state a cause

of action cognizable under the Tucker Act amendment

where appointed exchange employees are concerned.

To be sure, the court of appeals construed respond-

ent’s complaint as alleging a breach of an implied-

in-fact contract, whereas the plaintiffs in Testan did

not rest their claims on a contract theory. 424 U.S.

at 400. But, as we have already shown (see pages

8-9, ewpra), the decision in Hopkins precludes re-

spondent from asserting a cause of action in contract

12

against the United States for money damages based

on an allegedly wrongful discharge.

In any event, from the standpoint of Tucker Act

jurisdiction, the AAFES regulations that the court

below construed to establish an “implied-in-fact” con-

tract are subject to the same fatal flaw as the Classifi-

cation Act and Back Pay Act provisions considered

in Testan. The regulations prescribe procedures to

be followed by the AAFES in the hiring and firing

of its employees, but they do not provide that the

AAFES will be liable ii damages for any failure

to abide by the prescribed procedures. An “implied-

in-fact” contract, as the court of appeals recognized

(App. A, infra, 8a-9a, quoting Porter v. United

States, 496 F.2d 588, 590 (Ct. Cl. 1974), cert. de-

nied, 420 U.S. 1004 (1975)) is one “founded upon

a meeting of minds, which although not embodied

in an express contract, is inferred, as a fact, from

conduct of the parties showing, in light of their sur-

rounding circumstances, their tacit understanding.”

No “tacit understanding” to the effect that employees

discharged in contravention of AAFES regulations

will be entitled to back pay and other monetary relief

can be inferred from the AAFES regulations in ques-

tion.“ Moreover, any such understanding is negated

The court of appeals cited only one case—Aycock-Lindsey

Corp. v. United States, 171 F.2d 518, 521 (5th Cir. 1948)—

as direct authority for the proposition that the AAFES regu-

lations were part of an implied-in-fact contract between re-

spondent and the AAFES that gave respondent the right to

sue for damages under the Tucker Act (App. A, infra, 8a).

But in that case, which was decided prior to Testan, the regu-

lations in question expressly provided for the payment of

subsidies to individuals who complied with certain provisions

of the Federal Soil Conservation and Domestic Allotment Act.

The court in Aycock-Lindsey did not suggest that a Tucker

13

by the statutory exception of AAFES employees from

the coverage of the Back Pay Act effectuated by 5

U.S.C. (Supp. II) 2105(c) (see page 6 and note 5,

supra). The court of appeals’ holding that a dis-

charge in violation of AAFES regulations creates a

cause of action for breach of an implied-in-fact con-

tract cognizable under the Tucker Act amendment is

therefore clearly wrong.“

In sum, if the court of appeals’ decision is per-

mitted to stand, it will render the United States liable

for monetary claims by numerous appointed military

exchange employees even though there is no evidence

that Congress, in amending the Tucker Act, consented

to suit en such claims." Because the decision below

Act remedy on an implied-in-fact contract theory could be

based oi an agency’s failure to abide by regulations that made

no reference to money payments.

10 In addition, the court’s reliance (App. A, infra, ga) on

the equitable principle that “a federal agency is bound to

follow its regulations where the rights of individuals are af-

fected” is misplaced. It is well settled that the right to sue

the United States under the Tucker Act on a contract claim

must rest upon the existence of a contract express or implied

in fact, and not on a contract based merely on equitable con-

siderations and implied in law. See, e.g., Hatzlachh Supply

Co. v. United States, 444 U.S. 460, 465 n.5 (1980) ; Goodyear

Tire & Rubber Co. v. United States, 276 U.S. 287, 298 (1928) ;

United States v. Minnesota Mutual Investment Co., 271 U.S.

212, 217 (1926).

1 The number of persons employed by the military ex-

changes is substantial. In 1969, for example, the AAFES

ranked third in total merchandising operations behind Sears,

Roebuck & Company and J.C, Penney Company, with sales

in excess of $3.5 billion. In 1976, AAFES had more than

8,000 retail outlete and more than 10,000 other types of fa-

cilities, including auto repair, customer service, vending fa-

14

is directly contrary to this Court’s rulings in United

States v. Hopkins, supra, and United States v. Testan,

supra, we believe that summary reversal is ap-

propriate.

CONCLUSION

The petition for a writ of certiorari should be

granted, the judgment of the court of appeals should

be reversed, and the case should be remanded to that

court with directions to dismiss, for lack of jurisdic-

tion, those portions of the complaint seeking monetary

relief.

Respectfully s'ibmitted.

Wave H. McCreez, Jr.

Solicitor General

Tuomas S. MARTIN

Acting Assistant Attorney General

ELLIOTT SCHULDER

Assistant to the Solicitor General

Wir..LiAM KANTER

ELoIse E. DAVIES

Attorneys

FEBRUARY 1981

cilities and movie theaters. See Champaign-Urbana News

Agency, Inc., v. J. L. dp News Co., 682 F. 2d 680, 683

(Ith Cir. 1980).

la

APPENDIX A

No. 79-1471

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

ARTHUR EDWARD SHEEHAN, PLAINTIFF-APPELLANT

v.

ARMY AND AIR FORCE EXCHANGE SERVICE, AN IN-

STRUMENTALITY OF THE DEPARTMENTS OF THE

ARMY AND OF THE AIR FORCE, DEFENDANT-

APPELLEE

June 27, 1980

Appeal from the United States District Court

for the Northern District of Texas

Before GOLDBERG, GARZA and REAVLEY, Cir-

cuit Judges.

REAVLEY, Circuit Judge:

The sole iss « on this appeal is whether the district

court has been vested with subject matter jurisdic-

tion to adjudicate a suit filed by Arthur Sheehan

against the Army and Air Force Exchange Service

(“AAFES”) based upon wrongful discharge from

employment. The lower court dismissed for want of

subject matter jurisdiction. We reverse and remand

because we are persuaded that the lower court did not

lack jurisdiction.

I. The Facts and Procedural Posture

On March 16, 1976, Sheehan was an employee of

the AAF EHS serving as Shopping Center Manager for

2a

the Fort Jackson Exchange in South Carolina. On

that date, he received advance written notice of

separation based upon conduct off the job that alleg-

edly reflected discredit on the AAFES and that ren-

dered his retention incompatible with the best inter-

ests of the AAFES. The letter was signed by James

Stapleton, General Manager of the Piedmont Area

Exchange, but since Sheehan was then serving in a

special program identified as the Executive Manage-

ment Program (“EMP”),’ prior approval for the

dismissal was obtained from the Commander of the

AAFES, General Hospelhorn.“ Sheehan’s written re-

1 The EMP is intended to fulfill the continuing requirements

of the AAFES for highly qualified and dedicated executive

employees who will be readily available to meet the world-

wide executive personnel requirements of the AAFES. EMP

employees incur special obligations and enjoy specific benefits

not available to non-EMP employees of the AAFFS. Army

Reg. 60-21/Air Force Reg. 147-15 (“AR 60-21/AFR 147-15”),

c. 5, § II, 1] 5-6, 5-9 (Nov. 12, 1974). One of the benefits

enjoyed is longer notice periods. based upon length of service,

in the case of certain separations. Id. at {| 5-9, Appendix.

® The regulations regarding authority to dismiss an EMP

employee for cause are cumbrous, and are not the model of

clarity. Exchange Service Bulletin (“ESB”) No. 247 (July

2, 1975) {| 18 provides, in pertinent part:

An employee may be separated for cause by the official

with authority to separate the employee [AR 60-21/AFR

147-15 Section II, Chapter 1]....

Chapter 1, Section II of AR 60-21/AFR 147-15 grants ex-

press authority to separate AAFES employees only on the

basis of retirement, and this power is granted to the com-

mander of the AAFES. AR 60-21/AFR 147-14, c. 1, § II,

{| 1-9e. However, the Commander is also vested with the au-

thority to develop personnel policies, id. at {| 1-9b, to admin-

ister the EMP program, id. at N 1-9c, and to administer the

3a

sponse to the March 16, 1976 letter proved ineffective

and Stapleton signed a letter of final termination

dated April 16, 1976. Sheehan pursued administra-

tive appeal and convinced the hearing examiner

that his conduct had not reflected discredit on the

AAFES and that his retention was not contrary to

AAFES program worldwide, id. at J 1-94. Presumably, these

powers include dominion over the discharge of EMP em-

ployee of the AAFES. This interpretation is reinforced by

the definitional section of ESB No. 247. Paragraph 7n of

that Bulletin provides, in relevant part:

n. Management official: Except as provided below, the

management official is the official with authority to sep-

arate at the AAFES organizational element . . to which

the employee is assigned.

(1) If the employee is an EMP employee... whois...

separated by the Commander, AAFES, the management

official is the Commander AAFES.

The Commander is likewise empowered to delegate his au-

thority in writing. AR 60-21/AFR 147-14, e. § II, J 1-10.

A redelegation of power to dismiss EMP employees had

apparently already been authorized because J 7e (3) of ESB

No. 176 (July 29, 1974), which was signed on behalf of the

Commander, provides, in pertinent part:

Proposed involuntary separations of all Executive Man-

agement Program (EMP) employees that are not

initiated by the Commander, AAFES, will be subject to

the prior approval of the Commander, AAFES .... (em-

phasis in original)

The necessity for obtaining the prior approval of the Com-

mander of the AAFES, for involuntary dismissals of EMP

employees when the discharge was not initiated by him, was

reaffirmed less than a month after Sheehan received his let-

ter of final termination. ESB No. 299 8e (3) (May 10,

1976).

ESB No. 247 1 86 (July 2, 1975) permits appeal of sep-

arations for cause pursuant to {| 81-98 of that directive.

4a

the best interests of the AAFES. However, the Com-

mander of the AAFES, General Hospelhorn, acting

in the capacity of Appellate Authority, disagreed with

the hearing examiner and denied the appeal. He in-

formed Sheehan that the decision was final and was

not subject to further appeal or review. In Janu-

ary of 1978, Sheehan petitioned for reconsideration,

but this effort eventually proved barren when the

Chairman of the Board of the AAFES denied his

appeal.

Relief was sought in the district court. The com-

plaint alleged that Sheehan had been denied a free

and impartial appeal, because General Hospelhorn

gave prior approval for the discharge and also served

as Appellate Authority in deciding Sheehan’s admin-

istrative appeal, in derogation of AAFES regula-

tions* and procedural due process. General Hospel-

horn’s decision in denying the appeal was also assailed

as arbitrary, capricious, unsupported by substantial

evidence, an abuse of discretion, in excess of statutory

authority, and contrary to Sheehan’s constitutional

rights. Sheehan’s prayer for relief sought reinstate-

ment; back pay; other concomitants of employment,

including accrued vacation time, sick leave, and re-

tirement benefits; expenses incurred in seeking alter-

native employment; damages for mental anguish;

punitive damages; court costs; and attorney fees.

The district court ruled that it lacked subject mat-

ter jurisdiction and granted the AAFES’ motion to

*ESB No. 247 7 97a (July 2, 1975) provides that, or-

dinarily, the Commander of the AAFES is to serve as Ap-

pellate Authority. However, when he is the management

official, see note 2, supra, the Appellate Authority is to be

the Chairman of the Board of Directors, Army and Air Force

Exchange and Motion Picture Services.

dismiss. On appeal, Sheehan argues that the court had

jurisdiction under 28 U.S.C. §§ 1831(a), 1346 (a) (2),

and 1361 (1976). For the reasons stated below, we

think the court possessed subject matter jurisdiction.

II. The Jurisdictional Problem

Subject matter jurisdiction in the federal court

ordinarily involves an examination of the constitu-

tional limitations in Article III and congressional

statutory grants of power. When suit is brought

against the federal government, however, sovereign

immunity, unless waived, operates as a bar to the

action in the nature of an additional limitation on

the court’s subject matter jurisdiction. United States

v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 953, 47

L.Ed.2d 114 (1976); United States v. Sherwood, 312

U.S. 584, 587-88, 61 S.Ct. 767, 771, 85 L.Ed. 1058

(1941). A suit against the AAFES is considered a

suit against the United States because this nonap-

propriated fund instrumentality® is an “arm[] of

the government deemed by it essential for the per-

formance of governmental functions . . and par-

take[s] of whatever immunities it may have under

the constitution and federal statutes.” United States

v. State Tax Commission of Mississippi, 421 U.S.

5 A nonappropriated fund instrumentality is one that does

not receive its monies by congressional appropriation. United

States v. Hopkins, 427 U.S. 128, 125 n.2, 96 S.Ct. 2508,

2510, 49 L.Ed.2d 861 (1976). The AAFES was created and

is administered under the general authority vested in the

Secretaries of the Army and Air Force by 10 U.S.C. §§ 3012

and 8012 (1976). Absent special legislation, however, the

federal government does not assume the obligations of the

exchange services in the manner that «~ntracts entered into

by appropriated fund agencies are assur f. Hopkins, 427

U.S. at 127, 96 S.Ct. at 2511.

6a

599, 606, 95 S.Ct. 1872, 1877, 44 L.Ed.2d 404 (1975);

see Young v. United States, 498 F.2d 1211, 1215

(5th Cir. 1974); ef: Standard Oil Co. of California

v. Johnson, 316 U.S. 481, 485, 62 S.Ct. 1168, 1170,

86 L.Ed. 1611 (1942) (nonappropriated fund post ex-

changes are arms of the government). Because no

constitutional infirmity to the assumption of juris-

diction is implicated here, we turn our attention to

statutes which bestow subject matter jurisdiction in

the traditional sense and those that waive sovereign

immunity.

III. The Tucker Act

28 U.S.C. § 1346 (a) (2)“ confers subject matter

jurisdiction on the district courts in civil actions

against the United States, where the amount claimed

does not exceed $10,000," and that, inter alia, are

That section provides, in pertinent part:

(a) The district courts shall have origine! jurisdiction,

concurrent with the Court of Claims, of:

(2) Any other civil action or claim against the United

States, not exceeding $10,000 in amount, founded either upon

the Constitution, or any Act of Congress, or any regulation

of an executive department, or upon any express or implied

contract with the United States, or for liquidated or un-

liquidated damages in cases not sounding in tort... . For

the purpose of this paragraph, an express or implied contract

with the Army and Air Force Exchange Service, Navy Ex-

changes, Marine Corps Exchanges, Coast Guard Exchanges,

or Exchange Councils of the National Aeronautics and Space

Administration shall be considered an express or implied con-

tract with the United Staves.

Actions seeking more than $10,000 in damages lie within

the exclusive jurisdiction of the Court of Claims. A. L.

Rowan & Son, General Contractors, Inc. v. Department of

Housing and Urban Development, 611 F.2d 997, 999 (5th

Cir. 1980); Jones v. Alexander, 609 F.2d 778, 780 (6th Cir.

1980). Although Sheehan did not limit his prayer for mone-

7a

founded upon an express or implied contract with

the federal government. The 1970 amendment to this

statute provides that for purposes of the statute,

express or implied contracts with certain nonappro-

priated fund instrumentalities, including the AAFES,

are considered to be express or implied contracts with

the United States. This section also operates as a

waiver of sovereign immunity for the enumerated

genre of suits. A. L. Rowan & Son, General Con-

tractors, Inc. v. Department of Housing and Urban

Development, 611 F.2d 997, 999 (5th Cir. 1980).

Sheehan argues that an implied contract of em-

ployment existed between the AAFES and himself.

The AAFES counters with the argument that gov-

tary relief to $10,000, during oral argument his counsel

moved to amend the complaint and to waive any request for

relief in excess of that sum. No objection was entered on

behalf of the AAFES.

Although a complaint is fatally defective unless it contains

a proper allegation limiting the recovery sought, see Schlesin-

ger v. Councilman, 420 U.S. 788, 744 n.9, 95 S.Ct. 1800, 1806,

48 L.Ed.2d 591 (1975), defective allegations of jurisdiction

may be amended on appeal. 28 U.S.C. § 1658 (1976). We

have said that this statute is to be liberally construed. Me-

Govera V. American Air Lines, Inc., 511 F.2d 658, 654 (5th

Cir. 1975) (per curiam); accord Miller v. Davis, 507 F.2d

808, 311 (6th Cir. 1974). Permitting amendment at this stage

merely avoids a perfunctory refiling of another complaint

which limits the request for monetary relief to $10,000. Time

and expense for the parties and labor for court personnel

are minimized. See Mathews v. Diaz, 426 U.S. 67, 75 & n.9,

96 S.Ct. 1883, 1889, 48 L.Ed.2d 478 (1976); Schlesinger,

420 U.S. at 744 n.9, 95 S.Ct. at 1306; Willingham v. Morgan,

895 U.S. 402, 407-08 & n.8, 89 S.Ct. 1818, 1816-17, 28 L.Ed.2d

896 (1969) ; Jones, 609 F.2d at 780-81 (uncontested amend-

ment to complaint under Tucker Act permited on appeal).

8a

erning regulations establish beyond cavil that he

served as an appointed employee and did not toil

pursuant to contract. We note that although the

complaint does not, by its terms, refer to an implied

contract, it does charge that the administrative ap-

pellate procedure afforded Sheehan, subsequent to his

discharge, did not comport with applicable regulations.

Even if the regulations label the commencement of

Sheehan’s employment as pursuant to “appointment,”

we do not think that ends the inquiry. Other regula-

tions provide that an AAFES employee may be sepa-

rated for cause only under certain conditions and

provide for administrative appeal from the separa-

tion decision.’ These latter regulations manifest the

understanding of the parties concerning discharge

procedures while Sheehan continued in AAFES em-

ployment. Accordingly, the regulations were part of

a collateral implied in-fact contract between Sheehan

and the AAFES that the AAFES would adhere to the

regulations in its dealings with him. See Aycock-

Lindsey Corp. v. United States, 171 F. 2d 518, 520-21

(5th Cir. 1948); cf. Bodek v. Department of Treas-

ury, 582 F.2d 277, 279 n.7 (2d Cir.) (per curiam),

cert. denied, 429 U.S. 849, 97 S.Ct. 137, 50 L.Ed.2d

122 (1976) (validly enacted regulations are implied

part of an express contract). A contract implied-in-

fact is one “founded upon a meeting of minds, which,

although not embodied in an express contract, is in-

ferred, as a fact, from conduct of the parties showing,

in the light of their surrounding circumstances, their

tacit understanding.” Porter v. United States, 496

*The AAFES points to AR 60-21/AFR 147-15, c. 2, §1;

c. 5, § II (Nov. 12, 1974).

ESB No. 247 {| 18, 27, 81-98 (July 2, 1975).

9a

F.2d 583, 590, 204 Ct. Cl. 355 (1974), cert. denied,

420 U.S. 1004, 95 S.Ct. 1446, 43 L.Ed.2d 761 (1975).

That understanding was reinforced by the well

established legal principle that a federal agency is

bound to follow its regulations where the rights of

individuals are affected. E. g. Morton v. Ruiz, 415

U.S. 199, 235, 94 S.Ct. 1055, 1074, 39 L.Ed.2d 270

(1974) ; Vitarelli v. Seaton, 359 U.S. 535, 539-40, 79

S.Ct. 968, 972-78, 8 L.Ed.2d 1012 (1959).

The allegation that the discharge violated control-

ling regulations was, therefore, equivalent to an alle-

gation of breach of an implied-in-fact contract. Such

a claim is sufficient to avoid dismissal on jurisdic-

tional grounds, United States v. Hopkins, 427 U.S.

123, 130, 96 S.Ct. 2508, 2512, 49 L.Ed.2d 361 (1976).

Accordingly, the lower court should not have dis-

missed the suit; it had power to hear the dispute and

to award monetary relief pursuant to section 1346

(a) (2). |

Section 1346 (a) (2) does not, however, confer sub-

ject matter jurisdiction on the district court to award

nonmonetary cure. E.., Lee v. Thornton, 420 U.S.

139, 95 S.Ct. 853, 43 L.Ed.2d 85 (1975); Jones v.

Alexander, 609 F.2d 778, 781 (5th Cir. 1980).”

10 Some circuit courts have intimated vnat the district courts

may have jurisdiction under section 1346 (a) (2) to award

equitable relief in the narrow circumstance where it is merely

incidental to and in aid of a primary request for monetary

succor. Werner v. United States Department of Interior,

Fish and Wildlife Service, 581 F.2d 168, 171 (8th Cir. 1978) ;

Larionoff v. United States, 688 F.2d 1167, 1181 (D.C.Cir.

1976); af’d 481 U.S. 864, 97 S.Ct. 2150, 68 L.Ed.2d 48

(1977). Assuming arguendo that such an exception does

obtain. it is inapplicable because the principal relief sought

here is reinstatement and restoration of employment benefits.

It cannot be said that the nonmonetary remedy is merely

incidental to or in aid of Sheehan’s claim for monetary relief.

10a

The source of that power must be found in other

statutes.

IV. General Federal Question Jurisdiction

28 U.S.C. § 1831(a) (1976) u confers subject mat-

ter jurisdiction on the district courts for actions

which arise under the Constitution and laws of the

United States. Ordinarily, at least $10,000 must be

at stake, but after the 1976 amendment to this stat-

ute, the monetary limitation does not pertain to suits

against an agency of the federal government. Al-

though the complaint did not specify this provision

as a basis of jurisdiction, if the facts alleged meet the

limitations, the lower court had jurisdiction notwith-

standing the omission. Andrus v. Charlestone Stone

Products Co., 486 U.S. 604, 607, 98 S.Ct. 2002, 2005

n.6, 56 L.Ed.2d 570 (1978); Schlesinger v. Council-

man, 420 U.S. 738, 744 n.9, 95 S.Ct. 1300, 1306, 43

L.Ed.2d 591 (1975).

Sheehan’s complaint alleged procedural due process

violations, arbitrary and capricious action constitut-

ing an abuse of discretion (presumably in contraven-

tion of substantive due process), and that Hospel-

horn’s denial of the appeal infringed other constitu-

tional and statutory protections. The charge that

appellate review by Hospelhorn violated governing

regulations also arises under the laws“ of the United

11 That section provides:

(a) The district courts shall have original juridiction of

all civil actions wherein the matter in controversy exceeds

the sum of value of $10,000, exclusive of interest and costs,

and arises under the Constitution, laws, or treaties of the

United States except that no such sum or value shall be re-

quired in any such action brought against the United States,

any agency thereof, or any officer or employee thereof in his

official capacity.

lla

States. Chasse v. Chasen, 595 F.2d 59, 61 (1st Cir.

1979); Spencer v. Laird, 442 F.2d 904, 906 (2d

Cir. 1971); Farmer v. Philadelphia Electric Co., 329

F.2d 3, 7-8 (3d Cir. 1964). Federal question jurisdic-

tion under section 1331(a) is triggered by these alle-

gations because they are not “so patently without

merit as to justify. . . the court’s dismissal for

want of jurisdiction.” Duke Power Co. v. Carolina

Environmental Study Group, Inc., 438 U.S. 59, 70,

98 S.Ct. 2620, 2629, 57 L.Ed.2d 595 (1978), quoting,

Hagans v. Lavine, 415 U.S. 528, 542-43, 94 S.Ct.

1372, 1381-82, 39 L.Ed.2d 577 (1974) (emphasis

in the original).

Nevertheless, section 1331 (a) is not a waiver of

sovereign immunity. Beale v. Blount, 461 F.2d 1133,

1138 (5th Cir. 1972). Sheehan must look to 5 U.S.C.

§ 702 (1976)” for the waiver. The 1976 amendment

12 That section provides:

A person suffering legal wrong because of agency action,

or adversely affected or aggrieved by agency action within

the meaning of a relevant statute, is entitled to judicial re-

view thereof. An action in a court of the United States seek-

ing relief other than money damages and stating a claim that

an agency or an officer or employee thereof acted or failed

to act in an official capacity or under color of legal authority

shall not be dismissed nor relief therein denied on the ground

that it is against the United States or that the United States

is an indispensable party. The United States may be named

as a defendant in any such action, and a judgment or decree

may be entered against the United States. Provided, That

any mandatory or injunctive decree shall specify the Federal

officer or officers (by name or by title), and their successors

in office, personally responsible for compliance. Nothing

herein (1) affects other limitations on judicial review or the

power or duty of the court to dismiss any action or deny re-

lief on any other appropriate legal or equitable ground; or

12a

to that statute waives sovereign immunity for actions

against federal government agencies, seeking non-

monetary relief, if the agency conduct is otherwise

subject to judicial review.

We are cognizant of the fact that the Second Cir-

cuit has recently held that section 702 does not waive

the bar of sovereign immunity for nonstatutory re-

view of agency action under section 1331. Estate of

Watson v. Blumenthal, 586 F.2d 925, 932 (2d Cir.

1978). Nevertheless, we find the illumination of the

legislative history of section 702 by the Third Circuit

in Jaffee v. United States, 592 F.2d 712, 718-19

(3d Cir.), cert. denied, 441 U.S. 961, 99 S.Ct. 2406,

60 L.Ed.2d 1066 (1979), cogent. We too must re-

spectfully part with the Second Circuit and hold that

Congress did intend to waive the defense of sovereign

immunity for nonstatutory review under section 1331.

Accord, Collyard v. Washington Capitals, 477 F.Supp.

1247, 1252-53 (D.Minn. 1979).

However, the AAFES argues that the 1970 amend-

ment to 28 U.S.C. § 1846 (1976), which provided that

express or implied contracts with the AAFES are to

be considered as contracts with the United States,

impliedly prohibits jurisdiction under 28 U.S.C.

§1331(a) (1976) and 5 U.S.C. § 702 (1976). It

argues that in enacting that amendment, Congress

believed that it was extending the sole vehicle for

suit against the AAFES. Reliance is then placed on

Brown v. General Services Administration, 425 U.S.

820, 828-29, 96 S.Ct. 1961, 1965-66, 48 L.Ed.2d 402

(1976), and other cases, for the propositicn that this

(2) confers authority to grant relief if any other statute that

grants consent to suit expressly or impliedly forbids the

relief which is sought.

13a

belief, even if erroneous, impliedly prohibits relief

under clause (2) in section 702.

We do not find this argument persuasive. The

AAFES has not pointed us to any authority that

indicates that Congress’ purpose in enacting the 1970

amendment was to provide the only method for suing

the AAFES. Indeed, Hopkins, 427 U.S. at 125, 96

S. Ct. at 2510, states that the purpose was to clarify

that the fact that the government has not assumed

the obligations of the enumerated nonappropriated

fund instrumentalities does not prevent suit against

them from being suits against the United States.

Thus, after Hopkins it was clear that actions for

breaches of contract seeking monetary relief were to

be cognizable in the Court of Claims (and in the

district courts if the sum involved did not exceed

$10,000). But, we have no indicia of congressional

belief regarding the maintainability of suits against

AAFES for nonmonetary relief at the time the

amendment was before Congress. Consequently, we

do not find the enactment to be preclusive under a

Brown syllogism.

It is clear that the legislative history to section

702 indicates that Congress did not intend to expand

the waiver of sovereign immunity in the Tucker Act.”

4 H.R. Rep. No. 1656, 94th Cong., 2 Sess. 12-18, reprinted

in [1976] U.S. Code Cong. & Admin. News, pp. 6121, 6133

indicates that:

Likewise, the amendment to 5 U.S.C. section 702 is

not intended to permit suit in circumstances where stat-

utes forbid or limit the relief sought. Clause (2) of the

third new sentence added to section 702 contains a second

proviso concerned with situations in which Congress has

consented to suit and the remedy provided is intended

to be the exclusive remedy. For example, in the Court of

Claims Act, Congress created a damage remedy for con-

14a

When suit is premised solely on that Act, seetion

702 cannot expand the jurisdiction and waiver under

28 U.S.C. § 1346 (a) (2) to permit the award of non-

monetary relief in the district court. Conversely,

when suit is brought under statutes other than the

Tucker Act seeking a nonmonetary remedy for viola-

tion of the national Constitution and laws, the limited

grant of jurisdiction and waiver of sovereign im-

munity found in that Act does not expressly or im-

pliedly prohibit the suit. See Neal v. Secretary of

Navy, 472 F.Supp. 763, 773-75 (E.D. Pa. 1979).™

tract claims with jurisdiction limited to the Court of

Claims except in suits for less than $10,000. The meas-

ure is intended to foreclose specific performance of gov-

ernment contracts. In the terms of the proviso, a statute

granting consent to suit, i.e., the Tucker Act, “impliedly

forbids” relief other than the remedy provided by the

Act. Thus, the partial abolition of sovereign immunity

brought about by this bill does not change existing limi-

tations on specific relief, if any, derived from statutes

dealing with such matters as government contracts, as

well as patent infringement, tort claims, and tax claims.

(footnotes omitted).

1 Lee v. Blumenthal, 588 F.2d 1281 (9th Cir. 1979) and

Estate of Watson v. Blumenthal, 586 F.2d 925, 932-34 (2d

Cir. 1978) may conflict, to a certain extent, with this view.

Those cases involved suits seeking to compel the government

to redeem “Flower Bonds.” However, the value at stake in

both those cases far exceeded the $10,000 limitation on juris-

diction in the district courts under § 1846(a) (2). A suit seek-

ing a judgment for damages for breach of the bond contract,

which would*have been functionally equivalent to a judgment

ordering redemption, would have to have been brought in the

Court of Claims. Exercise of jurisdiction on those facts would

have the pernicious effect of undermining the exclusive juris-

diction of the Court of Claims. Cf. Carter v. Seamans, 411

F. 2d 767, 774-75 (6th Cir. 1969), cert. denied 397 U.S. 941,

90 S. Ct. 958, 25 L.Ed.2d 121 (1970). (Declining to exercise

15a

In this instance, nonmonetary relief is available un-

der 2 jurisdictional grant in 28 U.S.C. § 1331 (a),

and that statute is not a waiver of sovereign im-

munity and contains no express or implied interdic-

tion against nonmonetary relief.

V. Mandamus

28 U.S.C. § 1361 (1976)” confers subject matter

jurisdiction for actions in the nature of mandamus

to compel a federal agency to perform a duty owed to

the plaintiff. The statute is also a waiver of sov-

ereign immunity. Huffstutler v. Bergland, 607 F.2d

1090, 1092 (5th Cir. 1979) (per curiam); Beale,

461 F.2d at 1138.

Three elements must exist, however, before man-

damus is appropriately exercised: (1) the plaintiff

must have a clear right to the relief, (2) the de-

fendant must have a clear duty to act, and (3) no

other adequate remedy must be available. Jones, 609

F.2d at 781; Winningham v. United States Depart-

ment of Housing and Urban Development, 512 F.2d

mandamus jurisdiction so as not to interfere with the exclu-

sive jurisdiction of the Court of Claims). In fact, in Lee, one

of the reasons articulated for the reluctance “to accept this

action as pleaded” was the equivalence of the remedies of

damages and an order to redeem.

16 That section provides:

The district courts shall have original jurisdiction of

any action in the nature of mandamus to comp an

officer or employee of the United States or any agency

thereof to perform a duty owed to the plaintiff.

That this section cannot serve as a jurisdictional basis for

Sheehan’s unliquidated monetary cleim is evident from

Spaulding v. Nielsen, 599 F.2d 728, 730 (5th Cir. 1979) (per

curiam).

16a

617, 620 (5th Cir. 1975). With regard to this final

factor, the alternative remedy must be capable of

affording full relief as to the subject matter in ques-

tion. Carter v. Seamans, 411 F.2d 767, 773 (5th

Cir. 1969), cert. denied, 397 U.S. 941, 90 S.Ct. 953,

25 L.Ed.2d 121 (1970). Since we hold that Sheehan

can maintain his suit for both monetary and non-

monetary relief under alternative statutes, the lower

court did not possess mandamus jurisdiction.

VI. Summary

We have concluded that the district court possesses

subject matter jurisdiction to decide this controversy.

Power to provide monetary relief is found in the

Tucker Act, 28 U.S.C. § 1346 (a) (2), and authority

to award nonmonetary compensation flows from the

confluence of 28 U.S.C. § 1331 (a) and 5 U.S.C. § 702.

This holding precludes the existence of mandamus

jurisdiction in the district court. We travel no fur-

ther and should not be understood to intimate any

opinion on the merits.

REVERSED and REMANDED.

17a

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

Civil Action No. 3-78-0222-F

ARTHUR EDWARD SHEEHAN, PLAINTIFF

v.

ARMY AND AIR FORCE EXCHANGE SERVICE, INSTRU-

MENTALITY OF THE DEPARTMENTS OF THE ARMY

AND OF THE AIR FORCE, DEFENDANT

[Filed Jan. 15, 1979]

ORDER

CAME ON for consideration this date, Defendant’s

Motion to Dismiss or In the Alternative for Summary

Judgment in the above styled and numbered cause,

and after carefully reviewing the administrative rec-

ord herein as well as the pertinent authorities ad-

vanced by the Defendant in support of its Motion

to Dismiss,

IT IS ORDERED that Defendant’s Motion to Dis-

miss be and the same is hereby granted for the rea-

son that the Court finds and concludes as a matter

of law, pursuant to Federal Rule of Civil Procedure,

Rule 12(b) that the Court lacks subject matter juris-

diction over the instant action. Accordingly the

above-styled and numbered cause is ordered dis-

missed and is to be removed by the Clerk from the

docket of this Court.

SIGNED on January 15, 1979.

/s/ Robert W. Porter

United States District Judge

18a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 79-1471

D. C. Docket No. 3-78-0222-F

ARTHUR EDWARD SHEEHAN, PLAINTIFF-APPELLANT

versus

ARMY AND AIR FoRc EXCHANGE SERVICE, AN IN-

STRUMENTALITY OF THE DEPARTMENTS OF THE

ARMY AND OF THE AIR FORCE, DEFENDANT-

APPELLEE

Appeal from the United States District Court

for the Northern District of Texas

Before GOLDBERG, GARZA and REAVLEY, Cir-

cuit Judges.

JUDGMENT

This cause came on to be heard on the transcript of

the record from the United States District Court for

the Northern District of Texas, and was argued by

counsel ;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the order

19a

of the District Court appealed from, in this cause be,

and the same is hereby, reversed; and that this cause

be, and the same is hereby remanded to the said Dis-

trict Court in accordance with the opinion of this

Court;

It is further ordered that the defendant-appellee

pay to the plaintiff-appellant the costs on appeal, to

be taxed by the Clerk of this Court.

June 27, 1980

Issued as Mandate: Jul. 23, 1980.

Reissued as Mandate: October 8, 1930.

20a

APPENDIX D

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No, 79-1471

ARTHUR EDWARD SHEEHAN, PLAINTIFF-APPELLANT

versus

ARMY AND AIR FORCE EXCHANGE SERVICE, AN IN-

STRUMENTALITY OF THE DEPARTMENTS OF THE

ARMY AND OF THE AIR FORCE, DEFENDANT-

APPELLEE

Appeal from the United States District Court

for the Northern District of Texas

[Filed Sep. 26, 1980]

ON PETITION FOR REHEARING AND

PETITION FOR REHEARING EN BANC

Opinion 6-27-80, 5 Cir., 198—, —— F.2d ——)

(September 26, 1980)

Before GOLDBERG, GARZA and REAVLEY, Cir-

cuit Judges.

PER CURIAM:

(Vv) The Petition for Rehearing is DENIED and

no member of this panel nor Judge in regular active

service on the Court having requested that the Court

be polled on rehearing en banc, (Rule 35 Federal

Rules of Appellate Procedure; Local Fifth Circuit

21a

Rule 16) the Petition for Rehearing En Banc is

DENIED.

( ) The Petition for Rehearing is DENIED and

the Court having been polled at the request of one

of the members of the Court and a majority of the

Circuit Judges who are in regular active service not

having voted in favor of it, (Rule 35 Federal Rules

of Appellate Procedure; Local Fifth Circuit Rule 16)

the Petition for Rehearing En Banc is also DENIED.

( ) A member of the Court in active service hav-

ing requested a poll on the reconsideration of this

cause en banc, and a majority of the judges in active

service not having voted in favor of it, rehearing en

banc is DENIED.

ENTERED FOR THE COURT:

/s/ Thomas M. Reavley

United States Circuit Judge

Form 704-2

22a

APPENDIX E

ARMY REGULATION NO. 60-21/AIR FORCE

REGULATION NO. 147-15 (NOVEMBER 12, 1974)

provides in pertinent part:

1-7. Status of employees. a. AAFES personnel are

Federal employees of an instrumentality of the United

States within the Department of Defense.

* * * * *

1-9. Personnel authority. a. The authority to estab-

lish personnel policy is vested in the Board of Direc-

tors, Army and Air Force Exchange and Motion Pic-

ture Service, hereinafter referred to as the Board of

Directors.

* * * * *

F. The authority to appoint and promote AAFES

employees with or to grades designated above USP

15 is vested in the Board of Directors.

* * * * *

g. Authority must be exercised in accordance with

this regulation and procedures published by the Com-

mander, AAFES.

2-2. Appointment criteria. a. To be considered for

appointment, an individual must submit a complete

and accurate application for employment reflecting

that the individual meets the minimum requirements

for the position under consideration.

2-3. Appointment. a. After selection of an individ-

ual for appointment, but prior to official appointment,

each individual must submit the following:

23a

(1) Evidence that he is in satisfactory physical

condition, if requested. The appointing authority

may, if he deems it advisable, require a medical cer-

tification or physical examination at AAFES ex-

pense.

* * * * *

c. Official appointment will be effective upon issu -

ance to the individual of a copy of a properly ex-

ecuted AAFES personnel action. The effective date

of appointment will be the date indicated on the per-

sonnel action.

d. Appointments are considered probationary for

the periods specified below and these periods may not

be extended.

(1) Positions paid under the Universal Salary

Plan, management trainee program and college

trainee program—1 year.

(2) All other positions—90 days.

e. Employees will not be appointed to part-time,

temporary or on-call employment for the purpose of

determining the employee’s suitability for regular

full-time employment.

f. Employees will be appointed to step 1 of the

grade assigned to the position the employee will oc-

cupy, except that:

(1) Employees with special qualifications or ex-

perience may be appointed to step 2.

(2) Employees who will require further training

may be assigned to a lower grade, in accordance with

the provisions on training assignment in section I,

chapter 4.

(3) Upon specific approval by the Commander,

AAFES, an employee can be appointed to a step

higher than step 2.

* * * * *

24a

2-12. Employee utilization, payment, and benefits. a.

Regular full-time, regular part-time, temporary full-

time, temporary part-time, and on-call employees will

be utilized to perform approved standard and non-

standard jobs. Casual employees may be utilized to

fill unskilled non-recurring jobs.

b. Payment may be made—

(1) In accordance with the Universal Salary Plan,

Hourly Pay Plan, or Commission Pay Plan for all em-

ployees, except casual employees. To regular part-

time employees, in accordance with the Universal

Salary Plan, if approved by the Commander, AAFES.

(2) In accordance with the terms of the contract

when the employee is hired pursuant to an employ-

ment contract.

* * * hal *

8-4. Verbal reprimand. a. A verbal reprimand may

be given by the employee’s supervisor based upon

any of the following:

(1) Failure to adequately perform his job as set

out in the employee’s job description.

(2) Conduct on the job involving insubordination,

violation ct laws, regulations, rules or procedures, or

other conduct incompatible with maximum employee

efficiency.

(3) Conduct off the job reflecting discredit on

AAFES.

* — * * *

3-8. Separation for cause. An employee may be sepa-

ated for cause (sec. II, this chap.) by the official

with authority to separate the employee (sec. II,

chap. 1) on the basis of conduct specified in para-

graph 3-4a(2) or (3) when—

a. Other disciplinary actions and/or counseling are

determined to be inappropriate, or

25a

b. Other disciplinary actions and/or counseling

have been utilized without apparent success, and

c. The act of misconduct or delinquency is of such

a nature or so repetitious that retention of the em-

ployee in any capacity is determined to be incom-

patible with the best interests of AAFES.

* * * * *

EXCHANGE SERVICE BULLETIN NO. 247 (15-

52) (JULY 2, 1975) provides in pertinent part:

ADVERSE ACTIONS AND ADMINISTRATIVE APPEALS

81. The provisions of this directive pertaining to

adverse actions and administrative appeals apply to

regular full-time and regular part-time employees.

82. The advance notice of an adverse action will

be in writing and will:

a. Identify the specific adverse action contem-

plated.

b. State the effective date of the action contem-

plated, which will be no earlier than 30 calendar

days following the employee’s receipt of the advance

notice.

c. State specifically and in detail the reasons for

the adverse action contemplated, with sufficient in-

formation (such as dates, places, events, names, etc.)

to ensure that the employee understands the reasons

for the proposed action and to afford him a fair op-

portunity to respond.

d. Advise the employee of his right to reply, orally,

and/or in writing, and to submit affidavits in sup-

port of his reply. The employee will be afforded an

opportunity to be accompanied by a representative

during his oral reply if he so requests. Any expenses

involved in making an oral reply will be borne by the

26a

employee. He will be permitted to make any presen-

tations he feels are relevant and should be considered

before the final decision. The right of reply does not

include the right to a hearing with testimony from

witnesses for both sides of the controversy, but is an

opportunity for refutation of the advance notice.

When a reply is made orally, a written record will

be made and, if possible, the signature of the em-

ployee will be added as an indication that he agrees

with its accuracy.

e. Identify the official to receive the written or oral

reply.

f. Advise the employee that the reply must be filed

within five workdays of receipt of the advance notice

of the proposed action but that, upon good cause

shown, the official with authority to separate may ex-

tend the period to reply up to an additional five

workdays or a total period not to exceed 10 workdays

from the employee’s receipt of the advance notice of

the proposed action, provided the request for exten-

sion is received within five workdays of the employ-

ee’s receipt of the advance notice.

g. Advise the employee that his reply to the ad-

vance notice of adverse action will be given full con-

sideration before a final decision is made.

h. Inform the employee that a written final deci-

sion will be made within 10 workdays of receipt of

his reply or, if no reply is made within the authorized

reply period, a written final decision will be made

following expiration of the authorized reply period.

83. Within 10 workdays of receipt of the employ-

ee’s reply and after giving full consideration of the

employee’s reply or, if no reply is received, on the

day following expiration of the authorized reply

period, the official taking the action will make a final

27a

decision. If the decision is to withdraw the action, the

employee will be notified in writing. If the decision

is adverse to the employee, whether it is to take the

same action originally contemplated or a less severe

action, the employee will be advised of the action to

be taken. (If the official taking the action has made

a decision to impose a less severe action, a new ad-

vance notice is not necessary.) The final decision will

be in writing and will:

a. Reference the advance notice of adverse action.

b. Advise the employee, if a reply was received,

that full consideration was given to his oral and/or

written reply; or if no reply was received, state that

no reply was received.

c. State the action to be taken and the paragraph

of this directive under which it is being taken.

d. State the basis for the action and which of the

reasons in the advance notice of proposed action were

resolved in favor of the employee and which against

the employee. (The final decision will not add to the

reasons stated in the advance notice.)

e. State the effective date of the action (which

must be at least 30 calendar days from the date the

employee received the advance notice of the action).

f. State that this is the official’s final decision.

g. State that, within 21 calendar days of the re-

ceipt of the final decision, the employee may initiate,

under the provisions of this directive, an appeal of

the action taken. Any appeal submitted must con-

tain a statement that the employee either does or

does not desire an evidentiary hearing. The employee

should also be advised that assistance on the format

and procedures involved in filing the appeal may be

obtained from the servicing personnel office.

h. Advise the employee of his right to be repre-

sented by counsel or any other individual secured by

the employee at his expense in presentation of his

appeal.

84. The final decision will be furnished the em-

ployee by one of his supervisors. The time and date

of delivery will be noted on a copy to be retained by

the official making the final decision. If the em-

ployee is absent, the final decision will be sent to him

at the last-known address by certified mail, return

receipt requested.

85. An appeal from a final decision must be sub-

mitted within 21 calendar days of the employee’s

receipt of the written final decision. Upon request,

the appellant will be provided assistance by the servic-

ing personnel office in preparing a written appeal.

Neither the appellant nor his representative will be

intimidated or coerced in an effort to discourage the

appellant from exercising his right to appeal, nor will

an appellant or his representative be discriminated

against or reprisals be taken because of the exercise

of such right. If the appellant chooses to be repre-

sented by an AAFES employee, and if the employee

selected by the appellant consents and is determined,

by appropriate authority, to be reasonably available,

such employee will be made available. If an AAFES

employee is so designated, he may have reasonable

time off from his duties for the purpose of represent-

ing the appellant. AAFES employees assigned to the

office of the General Counsel, to personnel duties, or

to security duties may not serve as the appellant’s

representative, Appellants may not have more than

two representatives including legal counsel. If the

appellant has two representatives, one must be desig-

nated as his lead representative.

86. Disciplinary adverse actions which may be ap-

pealed under the procedures prescribed in paragraphs

81 through 98 of this directive are:

a. Suspension without pay for more than 30 cal-

endar days.

b. Separation for cause.

c. Withdrawal of EMP status, except for declina-

tion of transfer or for unsatisfactory performance.

87. Nondisciplinary adverse actions which may be

appealed under the procedures prescribed in para-

graphs 81 through 98 of this directive are:

a. Downgrade or reduction in compensation except

terminations of temporary promotions, terminations

of details, or as a result of rehire.

b. Separation for RIF.

c. Separation for disability or for maternity.

d. Downgrade or reduction in compensation for

unsatisfactory performance.

e. Withdrawal of EMP status for unsatisfactory

performance.

f. Separation for unsatisfactory performance.

88. The adverse actions set out in paragraphs 86

and 87 above are the only adverse actions from which

an employee may appeal under the procedures pre-

escribed in paragraphs 81 through 98 of this direc-

tive. Except for the adverse actions set out in 87d, e

and f above, appeals from nondisciplinary actions may

be made only on the basis of procedural errors or

discrimination, other than discrimination which would

be a basis for consideration under equal employment

opportunity procedures.

89. If an employee desires to appeal an adverse ac-

tion, he must address his appeal to the appellate au-

thority through the official making the final decision

80a

and the management official, if they are not one and

the same, The appeal may contain affidavits, docu-

mentary evidence and arguments in support of the

employee’s appeal; and must contain a statement that

the appellant does or does not desire an evidentiary

hearing. The name and address of the appellant’s

representative, if any, must also be stated in the

written appeal. The appellant must state the basis

for his appeal in sufficient detail to permit a hearing

examiner to understand the basis. He must also state

the remedy requested, which must be personal to him.

The issues to be brought before a hearing will be

limited to those set forth by the appeiiant in his

written appeal; however, the appellant may, by let-

ter received by the hearing examiner 10 or more

workdays prior to the date set for the convening of

the hearing on the appeal, amend his appeal to add

new issues. A copy of any letter amending an ap-

peal must also be sent to the management official at

the same time it is mailed or delivered to the hearing

examiner.

90. Upon receipt of an appeal from an adverse

action, the management official will, within five work-

days of receipt of the appeal, forward the entire file

to the hearing examiner. The file forwarded will

include the appeal, together with all evidence sub-

mitted by the appellant, the evidence upon which the

final decision to take the adverse action was based,

and a copy of the final decision notifying the appel-

lant of the adverse action.

91. Upon receipt of an appeal from an adverse ac-

tion, the hearing examiner will ascertain whether the

appeal is in accordance with the requirements of para-

graphs 81 through 98 of this directive. If it is ascer-

tained that the appeal does not comply with these

31a

requirements, the hearing examiner will return the

appeal to the appellant with a written explanation

as to why it was not accepted and, where applicable,

refer to the paragraph or paragraphs of this directive

that are the basis for not accepting the appeal. The

appellant will be given five workdays from date of

receipt of the hearing examiner’s letter to resubmit

his appeal. If the employee fails to resubmit his

appeal within five workdays, the appeal will be con-

sidered withdrawn. The determination of the hear-

ing examiner regarding acceptance of an appeal is

final and not subject to further appeal or review.

The determination of the hearing examiner will be

forwarded through channels to the employee with

a copy to the management official and to the official

making the final decision.

92. If the employee does not affirmatively request

an evidentiary hearing, a recommendation on the ap-

peal may be rendered by the hearing examiner on

the relevant evidence submitted. However, the hear-

ing examiner may request additional evidence from

either the appellant or the official making the final

decision prior to making a recommendation.

93. If the employee affirmatively requests an evi-

dentiary hearing or if the hearing examiner deter-

mines that an evidentiary hearing is necessary, a

hearing will be conducted by a hearing examiner.

94. Preparating [sic] for hearing. The manage-

ment official will select an individual to prepare and

present the case for management. The appellant and

the management official will notify the hearing exam-

iner in writing of the names and addresses of their

representatives in advance of the hearing.

a. The management official will provide facilities,

including recording equipment and a court reporter

or stenographer, as determined necessary by the hear-

ing examiner, and will perform other related func-

tions as prescribed by the Commander, AAFES.

b. The hearing examiner is authorized to consult

with the appellant and the management official and/

or their representatives on an informal basis in

advance of the hearing in order to clarify the issues,

attempt an informal resolution, secure agreement as

to certain undisputed facts, and attempt to narrow

the issues to be considered during the hearing.

95. Hearing examiners. A hearing examiner will

be responsible for establishing the date, time, and

place of the hearing, and for giving advance notice in

writing to all persons concerned in the case, with

instructions regarding the nature of their participa-

tion. Such notice will include: the date, time, and

place of the hearing; a statement of the purpose of

the hearing and of the right of both the appellant and

management to produce evidence in their behalf in

documentary form, or by testimony of witnesses; a

statement of the right of both the appellant and man-

agement to secure assistance and information from

the servicing personnel office; and a statement advis-

ing the appellant of his right to have representation

and his responsibility in arranging for that repre-

sentation.

a. The hearing examiner will conduct the hearing

in accordance with procedures prescribed and pub-

lished by the Commander, AAFES. The functions of

the hearing examiner are to identify the issues in-

volved, to ascertain and acquire all relevant facts, to

evaluate and weigh those facts, to make findings of

fact, and te render a written recommendation on the

appeal to the appellate authority. The hearing ex-

aminer will prepare a record of the hearing which

will include a verbatim transcript or, at his option, a

summarized record of the hearing, a statement of the

issues involved, appropriate findings of fact and a

written recommendation, including recommendations

for corrective action where required.

b. Evidence introduced during the hearing will be

limited by the hearing examiner to matters material

and relevant to the appeal. Strict adherence to the

formal rules of evidence will not be required.

e. When all evidence has been obtained, including

that contained in the transcript of the hearing when a

hearing is conducted, the appeal and evidence will be

reviewed by the hearing examiner. Unless further

evidence is required, the hearing examiner will make

a written recommendation on the merits of the appeal

and transmit it to the appellate authority. The hear-

ing examiner may recommend modification, if ap-

propriate, of any action which has been taken. The

hearing examiner may recommend appropriate cor-

rective action to facilitate implementation of the rec-

ommendation.

96. Record of hearing. The transcript of any hear-

ing will be prepared in duplicate. The original will be

forwarded to the hearing examiner who conducted

the hearing and the duplicate will be forwarded to

the management official. A copy will be made avail-

able, by the management official, for the use of the

appellant. The hearing record will include as a

minimum:

a. The request for a hearing.

b. Notice of the hearing.

c. The transcript of the hearing with exhibits.

84a

d. The hearing examiner’s report which will in-

clude:

(1) A statement of the issues.

(2) A statement of the findings of fact.

(3) The hearing examiner’s recommendation.

97. Appellate authority. a. The appellate author-

ity is the Commander, AAFES or, in his absence, the

Deputy Commander, AAFES. However, if the Com-

mander, AAFES is the management official, the ap-

pellate authority will be the Chairman, Board of

Directors, Army and Air Force Exchange and Motion

Picture Services.

b. The appellate authority will secure the legal ad-

vice of his servicing General Counsel prior to render-

ing his determination except that, when the Chair-

man of the Board of Directors is the appellate

authority, he will secure the legal advice of the Judge

Advocate General of the Army or of the Air Force,

as appropriate, prior to rendering his determination.

98. Determination by appellate authority. The ap-

pellate authority will render a written determination

on the appeal, The appellate authority may approve,

disapprove, or amend the recommendation of the hear-

ing examiner; return the case for further hearing; or

return the case for corrective action. The written de-

termination will, unless the hearing is to be reopened

or unless other corrective action requiring further

review is to be taken, include a statement that the

determination by the appellate authority is final and

not subject to further appeal or review.

a. One copy of the determination will be forwarded

to each of the following: the appellant, the hearing

examiner, the management official, and any inter-

mediate headquarters, as appropriate.

85a

b. In the event a rehearing or further review is

ordered, processing of the appeal will continue in

accordance with paragraphs 94 through 98, as ap-

propriate.

. 6. coveenmant pasmtine orice; 1901 337960 2865